What is the maximum amount City Wide's audit costs may run?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee1 | Amount | Due Date | Remarks |
|---|---|---|---|
| you under the franchise | |||
| agreement | |||
| (including the Initial | |||
| Fees). The Transfer Fee is in | |||
| addition to any third-party | |||
| broker fee. No Transfer Fee is | |||
| assessed for a transfer to your | |||
| survivor. | |||
| Audit | Amount of underpayment, plus interest at highest legal rate, not to exceed 10%. If underpayment is 2% or more, you must reimburse CITY WIDE for its audit costs. Audit costs may run as much as $6,000. | Upon billing by CITY WIDE. | Payable only if au |
Source: Item 6 — OTHER FEES (FDD pages 16–20)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, franchisees may have to reimburse City Wide for audit costs under certain conditions. Specifically, if an audit reveals an understatement of at least 2% of Gross Sales for any month, the franchisee is responsible for covering City Wide's audit expenses.
The FDD specifies that these audit costs may run as high as $6,000. In addition to covering the audit costs, the franchisee will also be responsible for paying the amount of the underpayment plus interest. The interest rate will be the highest legal rate, but it will not exceed 10%.
This provision highlights the importance of accurate financial reporting for City Wide franchisees. Franchisees should maintain meticulous records and implement robust accounting practices to minimize the risk of underreporting sales. Failing to do so could result in significant financial penalties, including audit costs, interest charges, and the repayment of underpaid royalties.